We move our recommendation on Telecom Argentina (B2/B-/B-) from Overweight to Neutral, while retaining the TECOAR 8.500% 2036 notes as our preferred expression within the curve for investors seeking to maintain exposure. The change is driven by valuation rather than a reversal in our fundamental view of the credit. Telecom remains an improving B rated Argentine credit, supported by TMA margin convergence, lower leverage, positive free cash flow, and a stronger maturity profile after the January refinancing. However, the front of the curve has rallied to levels that leave limited room for additional spread compression, given weak liquidity, unresolved regulatory risk around the TMA acquisition, and the dividend authorization in place through the end of 2026.

The 1Q26 results support the credit, but they do not justify keeping a broad issuer level Overweight after the move tighter. The key improvement was the quality of profitability across the enlarged platform, especially at TMA, where margin convergence progressed faster than we previously expected. That matters because the investment case after the acquisition depends less on near term revenue synergies, which remain constrained by the regulatory process, and more on cost discipline, efficiency gains, and the ability to narrow the profitability gap between the two platforms. The quarter also reinforced that the January refinancing was not just a technical event. Telecom’s maturity profile is now more manageable, and near-term refinancing pressure has declined.

These positives would normally support a more constructive credit call, but in our view, they are already largely reflected in the front of the curve. The TECOAR 9.500% 2031 notes trade at $107.3, with 3.4 years of duration, 343 bps Z-spread, and 7.3% YTW. At 343 bps, the 2031s screen near one-year tights and well inside the 3M and 1Y averages of 406 bps and 483 bps, respectively. The TECOAR 9.250% 2033 notes trade at $106.2, with 3.1 years of duration, 362 bps Z-spread, and 7.4% YTW. The current Z-spread is also near the tight end of its one-year range and well inside the 3M and 1Y averages of 422 bps and 504 bps, respectively. On a yield basis, the 2031s and 2033s yield meaningfully below the EM B Index YTW of 8.7%.

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We maintain our Neutral recommendation on MercadoLibre. We continue to view MELI as one of the highest-quality BBB credits in LatAm, supported by structural leadership in e-commerce and fintech, strong ecosystem dynamics, scale advantages, and robust operating cash generation. However, 1Q26 reinforced the same credit trade-off that shaped our 4Q25 view. Growth remains exceptional, but management continues to prioritize ecosystem expansion, credit growth, free shipping, fulfillment, 1P, cross-border trade, AI, and credit card scaling over near-term margin recovery. We view this strategy as supportive of long-term franchise value, but it keeps profitability under pressure, sustains a structurally larger balance sheet, and limits the case for a more constructive bond recommendation at current spreads.

From a credit perspective, the quarter does not change our view of MELI as a strong investment-grade issuer, but it reinforces why we remain Neutral. The company continues to generate substantial operating cash flow, but adjusted free cash flow remains sensitive to the pace of Mercado Pago credit growth. Leverage moved higher, liquidity coverage tightened, and margin recovery is likely to remain gradual as management keeps investing behind ecosystem growth. We do not view these trends as a material credit concern given MELI’s scale, cash generation, and market access, but they temper the case for adding exposure despite the modest spread give-back and better all-in yield.

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We maintain our Opportunistic Overweight recommendation on CSN, with a preference for the CSN 4.625% 2031s as the more balanced expression and the CSN 5.875% 2032s as the higher upside expression within our preferred part of the curve. We continue to use the Opportunistic Overweight label deliberately, as the thesis remains driven by valuation dislocation, distressed dollar prices, and potential upside from deleveraging execution rather than by a clean improvement in the underlying credit trajectory. The recent downgrade cycle remains central to the spread dislocation, but we think the market is now pricing CSN closer to a distressed recovery trade than a conventional single B credit.

1Q26 results were not strong enough to remove the core concerns around leverage, free cash flow, secured debt, and execution risk, but they also did not point to a near term liquidity event. Revenues declined 7.0% QoQ and 2.8% YoY to R$10.60 billion, while adjusted EBITDA declined 12.1% QoQ on our normalized basis but increased 5.5% YoY to R$2.65 billion. Operating performance was mixed, with weaker sequential EBITDA mainly reflecting mining seasonality, heavier rainfall, and logistics pressure, while cement delivered record EBITDA and steel showed signs of improvement in March and April. Credit metrics improved sequentially, with gross leverage declining to 4.74x from 4.98x and net leverage improving to 3.49x from 3.59x. However, leverage remains materially higher when customer prepayments are included, with gross leverage at 5.98x and net leverage at 4.72x, reinforcing that the balance sheet remains stretched despite the sequential improvement. Cash generation also remained weak, as adjusted EBITDA covered capex and interest, but working capital and other below the line items pushed net free cash flow to a R$1.04 billion outflow. In our view, the quarter keeps the thesis tied to execution, with deleveraging still dependent on stronger cash conversion, inventory reduction, refinancing execution, and asset sale proceeds.

Liquidity remains adequate at the consolidated level, but the headline cash balance deserves caution from a bondholder perspective. CSN’s reported cash of R$14.62 billion covered short term debt by 1.6x as of March 2026, while the standalone parent balance sheet showed a materially tighter position. Parent level cash and short term investments totaled R$2.21 billion against R$4.96 billion of standalone short term borrowings and R$12 million of lease liabilities, leaving a funding gap of roughly R$2.76 billion before refinancing, intercompany flows, asset sales, or new funding sources. We think this distinction matters because the parent company carries the key refinancing burden, including near term bank maturities, financial expenses, capex needs, and the 2028 bond maturity.

The US$1.2 billion bridge loan signed in April, with potential expansion to US$1.4 billion, materially improves near term funding visibility. Including the bridge loan proceeds, pro forma liquidity would increase to approximately R$20.88 billion, short term debt would represent 44.5% of pro forma liquidity, and pro forma liquidity would cover short term debt by 2.2x. We would still not characterize liquidity as strong, given negative free cash flow and the much tighter standalone parent position, but the bridge loan reduces near term refinancing pressure and gives CSN additional time to execute its deleveraging plan.

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We maintain our Neutral recommendation on Braskem. 1Q26 results improved sequentially at the EBITDA level, but not enough to change the credit debate. Braskem remains a capital structure and liquidity story rather than a clean cyclical recovery story, with very high leverage, negative FFO, weak cash generation, limited working capital flexibility, and the drawn US$1.0 billion standby facility due in December 2026 still central to the refinancing discussion. We think REIQ support, the recent improvement in petrochemical spreads, and the ongoing governance reset provide important optionality, but they do not yet solve the balance sheet problem.

The main change since our 4Q25 downgrade is valuation. Braskem’s senior unsecured bonds have rallied materially from distressed levels, with the BRKME 4.500% 2028s now at $66.9, up from $46.9 at the time of our 4Q25 report, the BRKME 4.500% 2030s at $60.9 versus $46.4, the BRKME 8.500% 2031s at $62.1 versus $44.9, and the BRKME 5.875% 2050s at $48.3 versus $38.5. The move reflects lower perceived immediate default risk, policy support, better short-term spread expectations, and progress on the ownership and governance framework. However, the underlying credit risks remain largely unresolved. In our view, the rally has reduced the margin of safety before Braskem has delivered a credible out-of-court solution, restored working capital access, or addressed the December 2026 standby maturity. That keeps us from turning more constructive, even with yields still elevated across the curve.

We also recognize that the operating backdrop has become less negative since the 4Q25 report. Petrochemical spreads have improved, and management indicated that stronger pricing was already visible in April. Management also noted that current spread levels could support high-cycle EBITDA potential, using 1Q17 as a reference point, when quarterly EBITDA exceeded US$1.0 billion under similar spread conditions. This is an important reference, but not a normalized earnings target. Braskem also emphasized that liquidity, working capital, feedstock access, and utilization remain the binding constraints on translating stronger spreads into cash generation. We therefore view the better spread environment as a meaningful source of optionality, but not yet as confirmation of a durable credit turn.

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We maintain our Overweight recommendation on JBS, although the trade has become more selective following weaker 1Q26 results and the spread compression observed across the curve since 4Q25. The quarter was clearly softer, with adjusted EBITDA down 33.9% QoQ and 25.8% YoY, free operating cash flow turning to a $1.47 billion outflow, and our adjusted gross and net leverage increasing to 3.66x and 3.11x, respectively. We do not think 1Q26 breaks the broader credit thesis, as JBS remains supported by the scale and diversification of its global protein platform, strong liquidity, continued capital markets access, a manageable maturity profile, and management’s commitment to operate within its 2.0x to 3.0x company-defined net leverage target.

However, the quarter matters for bondholders because JBS used balance sheet capacity to absorb negative free cash flow while also carrying a declared $1.07 billion dividend payable in June. This leaves less room for near-term deleveraging and raises the importance of stronger cash generation over the remainder of 2026. We view refinancing activity as manageable given the company’s liquidity and market access, but paying dividends against a backdrop of negative free cash flow is less supportive from a creditor standpoint. We considered whether the weaker quarter, tighter free cash flow outlook, and leverage above 3.0x on our adjusted metrics justified moving to Neutral. Still, we think the remaining long-end spread pickup compensates investors for the deterioration in cash generation, provided management remains disciplined on shareholder distributions and M&A while free cash flow remains weak.

North America Beef remains the main operating overhang into 2026, while Brazil, Australia, Seara, and U.S. Pork continue to provide important offsets within a still uneven protein cycle. As a result, weaker cash generation and the upcoming June dividend make bond selection more important than it was at 4Q25.

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We maintain our Overweight recommendation on YPF (B2/B-/CCC+), as 1Q26 further supports our view that the company’s transition toward a lower-cost, oil-weighted, and more shale-centered asset base is improving credit resilience. Operating performance was strong, with adjusted EBITDA supported by stronger pricing, higher shale production, lower lifting costs, and better refinery processing levels. Shale oil production reached 205 kbbl/d, representing nearly 76% of total crude output, while total lifting costs declined to $8.8/boe. Credit metrics also improved, with gross leverage declining to 2.01x, net leverage falling to 1.69x, and interest coverage increasing to 4.86x. We think the quarter reinforces the underlying credit trajectory and supports a continued Overweight stance.

However, valuation now requires more discipline. YPF bonds have tightened meaningfully since our 4Q25 report, with compression especially sharp in the 8.250% 2034 notes. The Z-spread on the 2034s has tightened 94 bps to 333 bps from 427 bps at 4Q25, compared with a 70 bps move in the 2033s, a 59 bps move in the 9.500% 2031s, and a 53 bps move in the 2047s. The 2034s also no longer offer the same relative spread concession versus the 2033s. The Z-spread pickup has narrowed to about 22 bps from roughly 46 bps at 4Q25, reducing the relative value cushion that previously made the 2034s stand out more clearly. Still, this does not eliminate their appeal given their higher carry, wider current Z-spread, and lower duration. The strong performance leaves less room for another broad leg of spread compression, particularly with YPF already trading materially inside Argentina sovereign risk. The Z-spread differential between Argentina 2038s and YPF 2033s is now about 269 bps, compared with roughly 363 bps based on the 1-year average relationship, suggesting that a meaningful portion of the credit decoupling is already reflected in prices.

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We maintain our Neutral recommendation on Minerva, but with a more constructive valuation tone following the recent widening in the BEEFBZ 4.375% 2031 notes. Our 4Q25 downgrade was anchored on the view that the re-rating had largely played out, with the bonds trading close to or inside relevant EM BB benchmarks and offering limited asymmetry after a strong period of spread compression. Current levels have changed that picture. The 2031s have widened back to a meaningful spread premium versus the EM BB index while retaining a clean below-par structure, providing a more reasonable entry point. At the same time, we do not think the move is enough to restore an Overweight stance, as 1Q26 results still point to a balanced rather than improving operating setup. Revenue and EBITDA remain supported by scale, pricing, geographic diversification, and acquisition integration, but cattle cost inflation continues to pressure margins and free cash flow conversion, while cash interest coverage remains the key constraint to a more constructive credit view.

Minerva’s credit story remains intact. The company delivered 16.2% YoY EBITDA growth in 1Q26, reduced gross debt by 11.4% QoQ through active liability management, and maintained R$10.88 billion in liquidity, covering short-term maturities by 3.1x. Capital allocation continues to balance deleveraging with a more visible shareholder return framework, while the diversified export platform across Brazil, Argentina, Colombia, Uruguay, Paraguay, and Australia provides flexibility across origins and end markets.

However, the operating backdrop is not without pressure. Management expects 2026 margins to remain below 2025 levels on higher cattle costs across key origins, gross margin contracted YoY in 1Q26, net free cash flow was negative at R$811 million, net leverage increased modestly to 2.77x, and cash interest coverage of 1.93x remains below the 2.0x level we view as necessary for a more constructive stance. We note that cash financial expenses declined YoY in 1Q26, supported by active liability management. The new 7.500% 2036 notes are expected to target the rollover of short-term debt, which should eliminate 2026 refinancing risk and improve Minerva’s maturity profile and refinancing flexibility. While the coupon is meaningful, the net impact on cash interest will depend on the cost and amount of debt ultimately repaid. Sustained EBITDA growth and stronger free cash flow conversion after working capital therefore remain central to further improvement in interest coverage and credit metrics.

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We maintain our Neutral recommendation on Suzano. We continue to view Suzano as a high-quality BBB- LatAm credit, supported by global cost leadership in hardwood pulp, strong liquidity, a diversified revenue base, and disciplined financial policy. Valuation, however, remains the main constraint after the recent tightening. 1Q26 results were weaker on a headline basis, but the decline was driven mostly by normal first-quarter seasonality, lower shipments, BRL appreciation, and scheduled maintenance downtime rather than any deterioration in Suzano’s competitive position. Pulp pricing improved sequentially, cash costs remained structurally competitive, and liquidity remains strong, but leverage is still elevated and the credit remains exposed to pulp-cycle volatility and FX translation pressure.

The quarter reinforced the balance of the credit story. Suzano continues to benefit from scale, cost competitiveness, strong liquidity access, and a more supportive pulp pricing backdrop, while lower 2026 capex should help free cash flow recover as seasonal headwinds normalize. Potential non-core asset sales could provide an additional deleveraging lever, although we continue to view operating cash flow as the central driver of balance sheet improvement. At the same time, 1Q26 showed that higher USD pulp prices can still be diluted in reported BRL EBITDA by a stronger BRL, seasonal volume weakness, and scheduled maintenance effects. Gross leverage improved to 4.5x from 4.7x in December 2025, while net leverage remained broadly stable at 3.5x. That leaves the balance sheet supportive of the credit, but not yet strong enough to justify an Overweight recommendation. We therefore see free cash flow generation and gradual deleveraging as the key variables for any more durable re-rating.

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We maintain our Overweight recommendation on PEMEX, while becoming more selective across the curve after the strong policy-driven rally. The 1Q26 results reinforce our core view that PEMEX remains a government-backed credit, with bondholder performance driven more by policy support, liability management, and market access than by a self-sustaining recovery in standalone cash generation. Adjusted EBITDA recovered sharply, debt declined again, and government-related inflows through equity contributions, the FONADIN subvention, and collections from the Mexican government more than covered the company’s pre-contribution cash deficit. The stronger oil and refined product price environment provided an incremental tailwind, although in our view this layered onto rather than reshaped the credit story. For bondholders, we think 1Q26 again showed the depth of government commitment behind the credit.

At the same time, 1Q26 does not remove the structural weakness in PEMEX’s operating model. Adjusted EBITDA recovered to $6.71 billion from a very weak 4Q25 base, but the YoY comparison was less clean in local-currency terms, with EBITDA declining in MXN and consolidated revenues also lower in MXN. Cash generation improved at the headline free cash flow level, but pre-contribution net free cash flow remained negative after working capital, taxes, lease payments, and other cash uses. We would also be careful about extrapolating the lower 1Q26 capex run rate, as investment spending is likely to accelerate through the rest of the year. Liquidity has improved, supported by lower short-term debt, a cash balance that remains above recent historical levels, and meaningful revolver availability. However, the standalone position is not yet comfortable, as short-term debt still represents a high share of total liquidity. We therefore view the quarter as evidence of better liquidity visibility, supported by government backing and market access, rather than a durable improvement in standalone cash generation capacity.

The 2026 setup is more balanced, but also more valuation-sensitive. PEMEX has made visible progress in reducing debt, extending funding visibility, improving bank financing terms, and reentering the local capital markets. The renewal and expected improvement of revolving credit facilities should support liquidity flexibility, while management’s focus on debt-neutral issuance and liability management reduces near-term refinancing pressure. A debt-neutral USD transaction combined with tenders or buybacks would be credit positive, as it would reinforce market access and help smooth the maturity profile, but we would not use that optionality to favor any single short-dated bond at current levels. The cooperation agreement with Petrobras is also directionally positive, particularly as a potential source of technical expertise, operating discipline, and project execution support. However, we would not treat it as a near-term credit catalyst, given the absence of disclosed project economics, investment commitments, implementation timelines, or expected financial contribution.

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We maintain our Overweight recommendation on Vista Energy, but update our curve preference following the rally in the VISTAA 8.500% 2033 notes and the issuance of the new VISTAA 7.875% 2038 notes. After the recent spread compression, this is no longer a broad tightening call. The trade is now more about carry, curve selection, and choosing the right point of exposure. The 2033s remain a high-quality defensive hold for investors prioritizing lower duration and lower volatility. For new money, we prefer the VISTAA 7.625% 2035 notes as the more balanced expression. The newly issued 2038s also look attractive for accounts willing to add modest duration in exchange for the highest carry on the Vista curve.

Vista’s 1Q26 results continue to support the fundamental credit thesis. The quarter was marked by strong YoY production growth, resilient EBITDA generation, and a constructive guidance update. Management raised 2026 production guidance to 143 kboe/d from 140 kboe/d and left Capex unchanged at $1.5 billion to $1.6 billion. Under the $85/bbl Brent base case, Vista now expects $2.6 billion of adjusted EBITDA and $0.7 billion of free cash flow before the Equinor Transaction. Pro forma adjusted EBITDA is expected to increase to $3.0 billion after closing. This should support deleveraging, particularly as management has been clear that the next phase is about converting the enlarged production base into free cash flow and reducing net leverage toward approximately 1.0x by year-end 2026.

The key offset in 1Q26 was liquidity. Liquidity moved backward from the stronger year-end 2025 position, as cash and short-term investments no longer covered short-term debt at the end of March. The deterioration reflected an investment-heavy quarter, including VEISA-related working capital needs and acquisition funding. The subsequent $500 million 2038 senior notes issuance materially improved that snapshot and confirmed Vista’s continued access to international capital markets. Still, the lack of committed USD revolving credit facilities remains a constraint, and Al Mehwar’s reduced ownership limits the likelihood of external shareholder support in a stress scenario. Even with that caveat, Vista’s operating momentum, larger production base, and improved free cash flow outlook keep the Overweight case intact.

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We maintain our Neutral recommendation on Gerdau’s bonds. We continue to view the company as one of the cleaner BBB LatAm industrial credits, supported by conservative leverage, strong liquidity, and a structurally advantaged North American business. 1Q26 reinforced that view, with adjusted EBITDA increasing 23.2% YoY to R$2.96 billion, gross leverage improving to 1.45x, and FFO to total debt increasing to 53.3%. However, the curve already reflects much of this credit quality. At current levels, Gerdau’s belly screens rich versus the EM BBB curve, while the long end appears closer to fair value. This keeps us Neutral rather than more constructive, as the stronger credit profile is already largely reflected in spreads.

The key point for bondholders is that Gerdau’s credit story remains solid, but the valuation case for adding risk is limited. The GGBRBZ 5.750% 2035 notes trade around 103 bps OAS, priced at $102.6, with 6.9 years of duration and a 5.4% YTW. We view the 2035s as the best holding point on the curve because they offer the cleanest balance between carry, duration, liquidity, and credit quality, while providing direct exposure to Gerdau’s resilient North American earnings base. However, we do not view the notes as a compelling add at current levels. The notes trade visibly through the EM BBB curve at their duration, and the spread differential versus the EM BBB index is now close to flat compared with a one year average premium of around 17 bps. In our view, this reinforces the conclusion that valuation already captures much of Gerdau’s credit strength. We would become more constructive closer to 120 bps OAS, which would place the 2035s back near the EM BBB curve and represent a more defensible entry point for a Brazil corporate credit, even one with Gerdau’s stronger balance sheet and differentiated U.S. exposure.

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We maintain our Neutral recommendation on Cemex. While 1Q26 results reinforce the constructive credit trajectory we have flagged in prior reports, with operating momentum, margin expansion, and improving underlying cash generation supporting the path toward management’s leverage targets, valuation remains the binding constraint on our stance. Cemex bonds have compressed further across the curve and now trade inside their respective 3 month and 1 year averages, leaving limited room for additional tightening absent a clearer catalyst. In this context, we think the credit remains a high quality hold rather than a fresh Overweight opportunity, with curve selection becoming more important as spreads approach tighter levels. We view the 2029s as the defensive hold and the 2031s as the preferred risk adjusted bond for investors willing to add moderate duration.

From a fundamental standpoint, we view the credit profile as resilient and on a constructive trajectory, supported by structural margin gains under Project Cutting Edge, pricing discipline, and Mexico’s volume recovery. Fitch’s outlook revision to positive from stable on the BBB- rating during the quarter reinforces the rating upgrade path, with management guiding net leverage to converge toward the 1.5x BBB threshold by year end and potential agency action as early as 1H27. Mexico specific risks, trade uncertainty between the U.S. and Mexico, and broader geopolitical volatility remain potential sources of weakness, particularly in a risk off environment.

In our view, neither an Overweight nor an Underweight stance is appropriate at current levels. We do not see a strong enough catalyst for an Overweight, as the path toward a formal upgrade to BBB flat remains more likely skewed to 1H27 and the bonds already reflect much of the improvement. The 2031s trade at 129 bps OAS, broadly in line with the EM Corporate BBB Index at 132 bps OAS and inside their 1 year average, while the 2030s trade 26 bps tight to the EM Corporate BBB Index. At the same time, we do not view an Underweight as warranted given the absence of fundamental deterioration, the supportive rating trajectory, and the company’s improving free cash flow capacity. In our view, the credit story remains intact, but valuation already reflects the improving trajectory, leaving the risk reward more balanced than directional.

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We maintain our preference for the VAMOBZ 9.200% 2031 notes as the primary expression of a constructive view on the credit. Since January 6, SIMHBZ 2031 has compressed by roughly 148 bps to 498 bps, while VAMOBZ 2031 has drifted modestly wider to 649 bps, creating a 151 bps spread gap versus the essentially flat relationship that existed at initiation and a 160 bps yield gap in VAMOBZ’s favor. VAMOBZ also retains a shorter duration at 3.5 years versus 4.0 years for SIMHBZ. In our view, this combination of higher carry, lower duration, and operating-company positioning continues to make VAMOBZ the most attractive way to express the improving Simpar credit story for investors focused on defensive carry and downside protection. MOVIBZ 2029 remains the middle ground for investors focused on shorter duration and liquidity.

The 4Q25 results validate the directional thesis we outlined at initiation. Operating performance improved meaningfully, leverage continued to decline, and capital intensity reached its lowest level in five years, supporting the view that the group has entered a lower-investment and potentially more cash-generative phase. That said, underlying free cash flow remains dependent on working capital support and asset monetization rather than recurring operations alone, while Brazil’s elevated interest rate environment continues to constrain deleveraging by absorbing a large share of EBITDA and keeping EBITDA interest coverage thin. Liquidity is adequate, capital markets access has remained open at improving cost levels, and management has framed 2026 as a value-extraction and efficiency phase, with cash generation expected to become more resilient as investment needs normalize.

Within the group, cash conversion trends also reinforce our preference for Vamos. The comparison is directional rather than fully comparable, but it remains informative. In 4Q25, Vamos generated EBITDA equal to 3.8x net capex, versus only 0.6x at Movida, highlighting that Vamos is already operating in a much clearer lower-investment and higher-cash-conversion phase, while Movida remains materially more capital intensive. Simpar sits in between at the consolidated level, but the ratio is closer to 1.1x when using adjusted EBITDA rather than reported EBITDA, which benefited from the Ciclus Rio divestment. We think this reinforces the view that the strongest internal cash-generation profile in the complex currently sits at Vamos.

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We downgrade Braskem to Neutral from Overweight. The recent report that the company is considering seeking local court protection against creditors, even if no final decision has been made and plans may still change, materially alters the risk profile and, in our view, is difficult to reconcile with an Overweight stance. This comes on top of an already very weak 4Q25 backdrop, with results remaining below expectations, liquidity deteriorating sharply, leverage increasing further, and management framing 2026 around liquidity preservation and capital structure reorganization rather than recovery. Braskem’s own disclosure that its results indicate a material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern further reinforces this shift in the credit narrative. In that context, we no longer think it is appropriate to recommend adding risk until there is greater clarity on whether Braskem can secure a credible out of court solution or will need to pursue a more formal restructuring path.

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We maintain our Overweight recommendation on JBS, as 4Q25 results continue to support a constructive credit view despite some sequential pressure on profitability. The main strength of the story remains the scale and diversification of JBS’s global protein platform, which continues to offset weaker conditions in businesses facing more challenging livestock and commodity dynamics. This was again evident in 4Q25, as stronger performances in Brazil, Australia, and poultry helped balance weaker results in North America Beef and pork. The company also ended the quarter with strong liquidity, solid free cash flow, and net leverage of 2.68x, comfortably within management’s 2x to 3x target and supportive of investment-grade metrics. While we continue to view North America Beef as the main operating overhang into 2026, we think JBS’s diversified earnings base and healthy cash generation keep the overall credit story well anchored.

Within the curve, we continue to see the best value concentrated in the long end. We favor the JBS 7.250% 2053s from a carry-to-duration standpoint, as they offer a 6.5% YTW at 158 bps OAS, a price of $109.3, and 12.2 years of duration. Relative to Tyson, that implies 53 bps of incremental spread versus TSN’s 5.100% 2048s at 105 bps OAS and 56 bps versus TSN’s 4.550% 2047s at 102 bps, with broadly comparable duration. The 2053s also trade 53 bps wide to the U.S. Corp Long benchmark at 105 bps OAS, although we view that comparison more as a technical reference given the materially higher quality of that index. While that pickup has narrowed modestly from the roughly 60 bps differential implied by 3-month average spreads, we think the long end has retained more of its relative value than the belly, where compression versus Tyson and broader BBB benchmarks has been more pronounced. We also like the JBS 4.375% 2052s, which yield 6.3% at a price of $75.4 and 134 bps OAS. While the 2052s carry modestly higher duration than the 2053s and trade at a lower OAS, the $75.4 price embeds meaningful pull-to-par and convexity that we think compensate for the additional duration. In our view, the discount price offers better pull-to-par and somewhat better protection if spreads widen, while the 2053s provide stronger carry. The JBS 6.500% 2052s at $100.6 also remains a reasonable near-par alternative in the long end, but we continue to see the clearest value in the 2052s and 2053s.

In the belly, the JBS 6.750% 2034s remain the most interesting intermediate bond, but at 110 bps OAS they now trade well inside their 3-month average of 153 bps and their 1-year average of 123 bps, suggesting valuations have tightened materially and that upside is more limited from current levels. They are also only 15 bps wide to Tyson’s 5.700% 2034s at 95 bps OAS and 23 bps wide to Tyson’s 4.875% 2034s at 87 bps, which reinforces our view that the belly now looks closer to fair value. More broadly, the 2034s are only modestly wide to the U.S. BBB benchmark at 107 bps OAS and are tight to the EM BBB benchmark at 122 bps, while the JBS 5.950% 2035s at 119 bps OAS still offer somewhat better relative value in that part of the curve. That said, management’s comments around potential liability management involving the 2033 and 2034 bonds provide an additional technical element worth monitoring, as those bonds carry coupons of 5.750% and 6.750%, respectively, above what JBS could likely issue today in long-dated maturities.

We remain Neutral on the short end. The 2029s yield 4.7% for 2.7 years of duration and trade at 71 bps OAS, leaving them only 3 to 6 bps wide to Tyson’s 2029s, which in our view is not enough pickup to make the short end particularly compelling.

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We downgrade Minerva to Neutral following the significant spread compression observed across the curve over the past twelve months. The re-rating we anticipated has largely played out, and the bonds now reflect a credit that has completed its integration and stabilized its financial profile. At current levels, the investment case no longer offers the asymmetric risk-reward that underpinned our prior Overweight stance. The BEEFBZ 4.375% 2031 notes yield 6.3% for 4.3 years of duration, below the EM BB index yield of 6.8% at 5.8 years, while the BEEFBZ 8.875% 2033 notes yield 7.0% measured to the 2028 call date, trading inside the LatAm BB curve on an OAS basis and at the tight end of their 1-year range. With spread compression largely exhausted and carry no longer offering a meaningful premium relative to the broader EM BB universe, we think the risk-reward is balanced rather than asymmetric. The 2026 outlook reinforces this view, as the acquisition-driven deleveraging tailwind has been substantially absorbed, the resumption of dividends introduces a more balanced capital allocation framework, and margin compression from rising cattle costs is expected to keep EBITDA broadly stable in absolute terms. In this context, the credit is well managed and the fundamental trajectory remains constructive, but the bonds are fully priced for it. For investors already holding exposure, we prefer the BEEFBZ 4.375% 2031 notes as the more efficient and defensive exposure at current levels. We therefore view the current risk-reward as balanced rather than compelling.

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We maintain an Opportunistic Overweight recommendation on CSN, with a preference for the CSNBZ 4.625% 2031s and CSNBZ 5.875% 2032s, which in our view continue to offer the best combination of attractive carry, valuation, and upside potential along the curve. We use the Opportunistic Overweight label deliberately, as the thesis is driven by spread dislocation following rating actions and ongoing capital structure concerns rather than by an improving fundamental trajectory. 4Q25 results came in above expectations on both revenues and EBITDA, but they also confirmed ongoing credit pressure from negative free cash flow and rising leverage. While we think current spread levels already reflect the near-term pressure from cash burn, elevated capex, high financing costs, and still weak underlying steel profitability, persistent weak cash generation and softer credit metrics continue to reinforce the market’s cautious stance. Liquidity fully covers 2026 maturities and, assuming typical bank debt rollover, extends coverage into 2027. That said, cash declined meaningfully to R$16.0 billion, covering short term debt by 1.5x, and we no longer characterize the liquidity position as strong. We would view liquidity as becoming a more material concern if cash continues to decline without a corresponding improvement in operating cash flow or successful execution of liability management initiatives. Management reiterated that deleveraging remains a top priority, to be pursued through asset monetizations, liability management initiatives, and additional financing structures.

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We maintain our Overweight recommendation on Telecom Argentina (B2/B-/B), but with a revised preference across the curve following the January 2026 refinancing and the repricing of the front end. We continue to view the acquisition of Telefónica Móviles Argentina as strategically positive for the credit over the medium term, as it expands Telecom’s scale across mobile and broadband services, strengthens its competitive position in Argentina, and should support operating efficiencies as the integration progresses. At the same time, the 4Q25 results also show that margin normalization is likely to remain gradual rather than immediate, particularly at the acquired operations.

Operational performance in 4Q25 remained broadly resilient. Revenue growth was supported by the consolidation of TMA and higher ARPU across mobile, broadband, and Pay TV services, while leverage improved and free cash flow was healthy. Profitability softened sequentially, reflecting higher operating costs and integration-related pressures, but the underlying trajectory remains constructive. TMA’s EBITDA margin improved materially to 22.2% in 2025 from 11.0% in 2024, suggesting that the efficiency plan is beginning to gain traction even if quarterly progress is not linear.

From a credit perspective, the most important development is the improvement in the maturity profile. The US$600 million issuance of 2036 notes in January 2026, together with the repayment of acquisition-related loans and the redemption of the July 2026 notes, materially reduced near-term refinancing pressure. We view this as a meaningful credit positive, given that weak liquidity had been one of the main constraints in the Telecom story. While the transaction does not eliminate liquidity risk entirely, as short-term debt remains elevated and the company continues to operate without committed revolving credit facilities, the maturity profile is now more manageable. We also note that a significant portion of the remaining near-term obligations is denominated in local currency or dollar-linked instruments, which tend to be easier to refinance than hard-currency bonds.

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We maintain our Overweight recommendation on Pemex, supported by the continued demonstration of extraordinary sovereign backing and the resulting improvement in the company’s refinancing profile. Mexico’s 2025 debt strategy, including sovereign bond issuance, the $12 billion pre-capitalized securities (P-Caps) transaction, and the $9.9 billion bond buyback, has materially reduced Pemex’s financial debt and shifted part of the refinancing burden onto the sovereign balance sheet. These measures have strengthened liquidity visibility and improved the company’s maturity profile, reinforcing the sovereign’s commitment to supporting the company and anchoring near-term credit performance.

At the same time, 4Q25 results highlight the structural fragility of Pemex’s operating model. Revenues declined sequentially amid weaker crude realizations and a sharp contraction in export volumes, while adjusted EBITDA decreased to $1.85 billion from $3.20 billion in 3Q25. Free cash flow before working capital remained deeply negative, as operating cash generation was insufficient to cover elevated capital expenditures and interest payments. While recent liability management operations have helped reduce gross financial debt and improve leverage metrics, funds from operations remained negative, underscoring the company’s continued dependence on government support to stabilize liquidity and sustain investment.

Looking ahead, the 2026 credit story appears more dependent on technical and policy factors than on a meaningful improvement in underlying operating fundamentals. The large-scale support measures implemented during 2025 materially reduced near-term refinancing risk, but the scope for additional extraordinary interventions appears more limited in the near term. As a result, we believe the next phase of performance will likely depend more heavily on the pace of sovereign support through the federal budget, the evolution of Pemex’s funding strategy, and broader EM credit market conditions.

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We maintain our Overweight recommendation on YPF (B2/B-/CCC+), as 4Q25 confirms that the structural transformation of the asset base is translating into a more resilient credit profile, even if liquidity remains the key constraint.

We think 4Q25 reinforces the structural improvement in the operating profile. The transition toward a lower cost, more oil weighted portfolio continued to gain traction, with shale oil production up 41.9% YoY, representing 71.5% of total crude, and total lifting costs down 44.2% YoY. This mix shift, together with the sharp recovery in downstream profitability, helped lift adjusted EBITDA 53.0% YoY. The accelerated exit from mature conventional fields, combined with Vaca Muerta scale and midstream and export projects, including VMOS, with first oil expected in December 2026 at ~180 kbbl/d and ramping to ~550 kbbl/d by 3Q27, and Argentina LNG, with FID targeted for 2026, continues to de risk the asset base and improve through cycle margin resilience. This supports a more durable hard currency cash generation profile as export capacity expands and strengthens the standalone credit profile.

That said, we continue to view liquidity and refinancing execution as a constraint. Liquidity remains weak, with short term debt of $2.36 billion equivalent to 197% of cash plus short term investments, and roughly $2.1 billion of maturities scheduled for 2026. We think YPF’s continued market access helps offset this constraint, including the $500 million 2031 re tap in 4Q25, the $700 million export backed syndicated loan with $650 million undrawn as of February 2026, and the $550 million 2034 re tap in January 2026 that was partly used to prepay the $324 million CAF A/B loan. Divestment execution also remains an important part of the liquidity bridge, including proceeds collected from the Profertil stake sale and the signed sale of Manantiales Behr, which remains subject to closing.

The balance of the story remains Argentina risk. Despite improving operating fundamentals, sovereign and policy dynamics continue to act as the dominant overlay and can reprice the curve quickly. As the 2027 presidential cycle approaches, we expect political volatility to reemerge, limiting the scope for sustained decoupling in longer dated bonds and reinforcing the need for disciplined bond selection and careful duration control.

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